Atlantic Cities

Wealthy Foreigners Are Clustering In Only a Handful of U.S. Neighborhoods

Wealthy Foreigners Are Clustering In Only a Handful of U.S. Neighborhoods
Magnum Johansson/Shutterstock.com

"The great cities are becoming elite citadels," wrote Simon Kuper this past weekend in a dramatic piece in the Financial Times (our own Emily Badger covered it on Cities Monday). It's not artist-led and bohemian-driven gentrification that's the problem anymore, Kuper argues, it's plutocratization. "The great global cities – notably New YorkLondonSingaporeHong Kong and Paris – are unprecedentedly desirable," Kuper writes. But, and here's the other shoe dropping, he argues that "there's an iron law of 21st-century life: when something is desirable, the 'one per cent' grabs it."  

He's not the only one. After searching for housing in London, Ryan Avent of The Economist named it an exemplar of a "parasitic city." "The world craves London and is willing to pay vast amounts of money for a piece of it." But he adds, "London property owners, as a class, are effectively an incredibly successful rent-seeking operation greedily sucking up the economic surplus generated by the city's economy."

But just how far has this so-called plutocratization gone? What exactly are the cities and neighborhoods of the global one percent?

New data and analysis by Trulia chief economist and Cities contributor Jed Kolko helps us get at the extent of so-called plutocratization, at least for the United States.

The big takeway: Plutocratization by wealthy foreigners is a problem in a very select group of U.S. cities — three to be exact: New York, Los Angeles, and Miami. And even within those cities, it's affecting only a small group of neighborhoods within them.

The table below, from Kolko's analysis, show the neighborhoods with the largest percent of foreigners searching for real estate, according to Trulia data.

Rank Zip Code Neighborhood U.S. Metro Share of searches from outside U.S.
1 90077 Bel Air Los Angeles, CA 41%
2 90210 Beverly Hills Los Angeles, CA 38%
3 90069 West Hollywood/ Sunset Blvd. Los Angeles, CA 34%
4 33131 Brickell Ave./ Brickell Key Miami, FL 29%
5 10013 Tribeca/ Little Italy New York, NY-NJ 28%
6 10007 World Trade Center/ City Hall New York, NY-NJ 28%
7 33897 Davenport Lakeland-Winter Haven, FL 28%
8 90265 Malibu Los Angeles, CA 28%
9 33896 Davenport Lakeland-Winter Haven, FL 28%
10 10019 Midtown/ West 50's New York, NY-NJ 27%
11 10065 Lenox Hill/ East 60's New York, NY-NJ 26%
12 33132 Biscayne Blvd. Miami, FL 26%
13 90046 West Hollywood/ Laurel Canyon Los Angeles, CA 26%
14 90211 Beverly Hills/ Wilshire Blvd. Los Angeles, CA 26%
15 90049 Brentwood Los Angeles, CA 26%
16 33139 Miami Beach/ South Beach Miami, FL 26%
17 90068 Hollywood Hills Los Angeles, CA 26%
18 33009 Hallandale Beach Fort Lauderdale, FL 25%
19 33140 Miami Beach/ Mid-Beach Miami, FL 24%
20 90024 Westwood Los Angeles, CA 24%

L.A. tops the list with three neighborhoods: Bel Air, Beverly Hills, and West Hollywood. All in all, L.A. has nine neighborhoods in the top 20. Miami's Brickell is fourth. Miami and Fort Lauderdale combined account for five of the top 20. New York's Tribeca is fifth and World Trade Center area sixth. New York accounts for four neighborhoods of the top 20.

As Kolko notes, "What do these neighborhoods have in common? All of the global Los AngelesNew York, and Miami neighborhoods are pricey: foreigners search in some of the most expensive neighborhoods in each of these cities. … According to the Census, more than one third of the adults living in the Beverly Hills, Brickell, and NYC Tribeca / Little Italy ZIP codes were born outside the U.S." But he adds, "the impact of foreigners on U.S. housing is incredibly localized: while foreigners account for more than 25% of the home searches in a handful of global neighborhoods, most Americans live in neighborhoods where foreigners make up less than 3% of the home-search traffic. There's plenty of room for foreigners to branch out more."

On Monday, Badger noted, "Cities where only the super-rich can live will cease to function like cities are supposed to … A city with only one narrow class of people isn't a city in the truest sense. In fact, it's more like a suburb."

This echoes what Jane Jacobs once told me when I asked her about the gentrification of Manhattan's SoHo and surrounding neighborhoods. Calling attention to the vibrancy of cities, the mobility of people and capacity of great cities to constantly evolve and take on new functions in new spaces, she simply said: "When a place gets boring even the rich people leave."

Top image: Magnum Johansson/Shutterstock.com

Richard Florida is Co-Founder and Editor at Large at The Atlantic Cities. He's also a Senior Editor at The Atlantic, Director of the Martin Prosperity Institute at the University of Toronto's Rotman School of Management, and Global Research Professor at New York University. He is a frequent speaker to communities, business and professional organizations, and founder of the Creative Class Group, whose current client list can be found here. All posts »

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